1

Production Planning and Control

Report

Intelligent Planning and

Scheduling System
A conceptual solution for combating scheduling and planning problems in Industry.

Submitted by:
Junaid Ali Khan
ID: I201322177
PhD Management Science and Engineering
Supervisor: Dr. Deng Sheming
Email: junaidali1985@gmail.com

Table of Contents
1. Preface..............................................................................................3
2. The Evolution of Planning and Scheduling..................................................3
2.1 Planning and Scheduling: The Basic Concept.........................................3
2.2 Why is Planning and Scheduling so Important?.......................................5
2.3 Planning and Scheduling in General A Historic Overview........................8
2.3.1 Material Requirement Planning (MRP)............................................8
2.3.2 Manufacturing Resource Planning (MRP II).....................................9
2.3.3 Advanced Planning and Scheduling (APS).......................................9
2.3.4 Detailed Production Scheduling (DPS)..........................................10
3. Intelligent Scheduling and Planning System (IPSS).....................................11
3.1 IPSS Intelligent Scheduling...........................................................11
3.2 Intelligent Scheduling How IPSS Will Works.....................................11
3.2.1 Scenario description.................................................................12
3.2.2 Conventional Solutions.............................................................12
3.2.3 Example: Changing Factory Restrictions........................................13
3.2.4 IPSS Intelligent Scheduling......................................................13
3.2.5 Advantages over current approaches.............................................13
4 Summary..........................................................................................15
References.......................................................................................15

1. Preface
Planning and scheduling involves the whole company. Starting from a strategic sales
forecast, the production plans for individual factories are developed. The material
flow within each factory has to be controlled and production orders need to be
allocated efficiently to individual machines in order to meet the desired goals in
output, capacity utilization, cycle time, and efficiency.
Inefficient planning and scheduling is often the cause of the gap between required and
actual plant performance. Improper scheduling can cause high lead times due to
synchronization problems or the occurrence of dynamic bottlenecks. These can cause
delays on quoted delivery times. If a machine runs out of material due to bad
scheduling, then production capacity is lost and delivery dates may be missed.
Effective planning and scheduling can be a difficult task. Standard planning and
scheduling solutions often have problems in utilizing the full capacity of a plant. They
use heuristics (rules-based) systems that do not consider all relevant constraints and
cannot react quickly to unexpected events. In many cases they are merely enhanced
monitoring tools or they emulate the job of a manual planner. Even if they are faster
than a human planner, their heuristic approaches do not reach the plants full potential.
Often, they can only handle simple optimization criteria, such as due date or priority.
We propose a unique real-time, event-based factory scheduler solution. Our intelligent
solution does not rely on heuristics and will calculates a true optimum in real time
allowing factory staff to react quickly to unexpected events.

2. The Evolution of Planning and Scheduling

2.1 Planning and Scheduling: The Basic Concept
Planning and scheduling in general is a company-wide task. It starts with a sales
forecast and goes down to each single machine on the factory floor. Due to its
complexity, planning and scheduling has to be supported by software mainly ERP and
MES.
The graph below shows the planning and scheduling pyramid within a company.

Planning and scheduling is an integrated task. Each layer in the scheduling pyramid
depends on every other layer.
In the planning and scheduling process, the upper layers (demand forecast, supply
chain management and factory resource planning) determine when and where a
certain quantity of a particular product is needed. ERP modules can perform this task.
The factory floor needs to ensure that the factory output is in line with these forecasts.
This; however, is not typically an ERP task. ERP systems simply do not have access
to all relevant factory data. For example, ERP systems do not know the current state
of machines (operational, maintenance status, off-line, etc.) on the factory floor or
many of the constraints (machine capacities, staffing requirements, maintenance
schedules, recipe management, etc.) which govern the production process. This data is
available in MES systems. Ideally, the ERP system delivers the production targets and
receives resulting production plans meeting these targets from the MES layer.
So what happens on the shop floor and why is ERP-based scheduling insufficient?
The factory floor deals with production orders. A production order is the basic line
item of a production plan. Initially (prior to production planning) it consists of a
product with an amount, due date, and list of machines which can process it.
Eventually (after production planning is complete) it contains a scheduled start and
end date and a selected machine on which it is to be processed.
The production planning process must take into account all relevant constraints
including the current state of the factory floor (what is produced where) and meet all
other process requirements. Often, the number of constraints and their dynamic nature
makes scheduling difficult. Existing solutions often use rules-based heuristics and the
parameterized knowledge of factory staff to perform the scheduling task. These

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solutions imitate a human planner. Results from such systems may produce executable
production schedules. But they rarely utilize the full potential of a factory.
Planning and scheduling should not merely keep a factory running. It must be a tool
for reaching operational excellence. It must find production capacities hidden by the
constraints within the process and help in reducing setup times, meeting delivery
targets, optimizing energy and staff use, leveraging existing resources, and much
more.

2.2 Why is Planning and Scheduling so Important?

Planning and scheduling utilizes efficiency levers like energy savings or setup time
reduction. An efficient planning and scheduling tool directly contributes to the
company's financial performance.
At the company level, cash flow and profitability are essential. Planning and
scheduling can address the appropriate levers at the plant level to influence the
companys overall performance.
The diagram below shows some of the efficiency levers of planning and scheduling
and how they influence the company's performance.

The impact of scheduling on plant performance and utilization can have a great effect
on operational excellence.
In the following figure we show how factory success measures can be influenced by
the optimization levers which planning and scheduling controls. This should give an
idea of the important role which scheduling can play in utilizing and controlling these
levers.
Inventory Reduction
Not all resources in a factory work at the same rate. Some machines are newer
and faster, some can handle exotic products which may make them slower in

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certain cases. In addition the speed of machines is influenced by a wide variety
of factors, e.g. product variants or events like late delivery of raw materials.
These aspects cause different types of bottlenecks which impact the
manufacturing process.
Static bottlenecks include machine capacities and are known upfront. They do
not move across the manufacturing process or the shop floor.

They do not need to be predicted and even simple production planning

solutions take these bottlenecks into account.
Dynamic bottlenecks only appear at certain times depending on the specific
product variants which are currently produced. They may move across the
process and shop floor and are difficult to predict. Few production planning
systems take these bottlenecks into account.
Event driven bottlenecks appear when an unexpected event occurs. This can
be the break down of a machine or the loss of products due to quality issues or
an unexpected high-priority customer order. These bottlenecks are inherently
unpredictable and require quick reaction on the factory floor. Production
planning systems must have a real-time capability in order to support factory
staff reacting to unexpected events. Only quick and appropriate action can
minimize the impact of an event-driven bottleneck on the production process.
The standard approach to dealing with bottlenecks of any kind is the
maintenance of inventory (safety stock) for all or at least for the most critical
materials as well as the use of longer-than-necessary set up times to buffer
unexpected delays. Efficient production planning, i.e., planning which can
effectively and more detailed set-up matrices deal with every type of
bottleneck manages production with significantly less inventory than a
standard approach.
Increase of Throughput
Poor production planning can result in unnecessary idle times for resources
and worse unnecessary setup times. Another reason for idling machines is
the use of buffer times in order bridge small deviations from the schedule.

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This is intended to ensure that material and resources are available when
needed. Allowing for these buffer times also simplifies the manual calculation
of a production schedule by human factory staff. One advantage is a certain
degree of predictability of quoted delivery dates. But this advantage does not
come without cost. The same safety margins which guarantee delivery dates
also push these delivery dates back. The diagram below highlights this
behavior.

A sophisticated planning and scheduling solution can reduce idle times by

optimizing setups and reducing safety buffers while maintaining the same
degree of predictability. Sales staff can commit to earlier delivery dates and
still expect them to be met with a high degree of reliability.
Eliminating idle times also results in cycle time reduction and improves
factory throughput.
Reduction in Operating Cost
The reduction of idle times frees capacity hidden in the production process.
More can be done with less. Planning and scheduling helps to reduce
inventories by producing materials just-in-time. Optimized resource allocation
helps to save energy which will become an increasingly important factory as
energy cost are expected to go up in the future.
Another lever is the reduction of waste. In some factories the production
process cannot be stopped arbitrarily. Machines must produce something or
they must be shut down for extended periods of time, for example, at the end
of the year. If production is poorly planned a factory may be forced to produce
waste just to keep machines running. An efficient scheduler can reshuffle
waste production to the planned, end-of-year shutdowns, thus avoiding their
production entirely.

2.3 Planning and Scheduling in General A Historic Overview

Scheduling solutions of the past 30 years were unable or only partly able to assist
management in utilizing plant capacities. In the following paragraph we will discuss
the most important scheduling approaches with their strengths and weaknesses.

2.3.1 Material Requirement Planning (MRP)

Material Requirements Planning (MRP) is a production planning and inventory
control system used to manage manufacturing processes. It creates a production plan
by decomposing the bills of materials into sub-products and uses averaged production
times for each process step. Combined with an infinite capacity scheduler MRP can
deliver duty rosters for specific machines.
However, MRP has some major drawbacks:
Average production time: The system uses average production times for
each production step. Improvements on the shop floor are not generally
considered in MRP scheduling. They only lead to longer lead times, because
each step must take the same average production time, even if it is in fact
performed faster. If on the other hand a single step takes too long, then the
entire schedule may become obsolete.
Unlimited capacity: MRP calculations are based on the assumption that each
resource has unlimited capacity. This is an unrealistic assumption. A
production plan created based on this assumption does not fit the realities on
the shop floor.
Missing feedback: There is no closed-loop feedback between the participating
modules of MRP, making it hard to react to internal and external events which
may be disrupting the production process.
No shop floor connectivity: MRP has no interaction with the shop floor;
therefore, it cannot react to events. MRP is located at the ERP layer which
uses a different data architecture than shop floor systems, which consolidate
their data at the MES layer.
Rules-based (heuristic) approach: MRP uses rules in order to calculate a
production schedule. This is necessary due to efficiency issues. But these rules
can become invalid when events occur or the factory is changed in any way.

2.3.2 Manufacturing Resource Planning (MRP II)

MRPII systems consist of finite capacity scheduling (FCS), capacity requirements
planning (CRP), distribution resource planning (DRP) and other modules. MRPII
facilitates the development of a detailed production schedule that accounts for
machine and labor capacity. An MRPII output is a final labor and machine schedule.
Data about the cost of production including machine and labor time, materials as well
as final production numbers is provided from the MRPII system to accounting and
finance. MRP II takes into account the real production capacity and thus overcomes
one of the most critical shortcomings of MRP. It also has integrated closed-loop
feedback
Critical drawbacks remain:
No integrated solution: Even though MRP II has integrated closed-loop
feedback, the various modules and layers make calculations and
communication quite inefficient. The large number of modules generates a
tremendous communication overhead.
No shop floor connectivity: Just like MRP the MRP II approach is an ERP
layer application and unable to exchange relevant data in real time with shop
floor information systems.
Rules-based (heuristic) approach: MRP II uses rules-based algorithms for
planning and, therefore, produces the inefficient schedules just like MRP.

2.3.3 Advanced Planning and Scheduling (APS)

As seen before, traditional MRP and MRP II systems utilize a step-by-step procedure
to allocate material and production capacity and plans them separately. Many MRP
systems do not consider limited material availability or capacity constraints. Such
approaches often result in unfeasible schedules which cannot be executed on the shop
floor.
Unlike previous systems, APS simultaneously plans and schedules production in an
integrated approach which is based on available materials, labor and plant capacity.
APS solutions appeared to be a tool for the factory director to achieve optimal plant
performance. But soon it became obvious that APS could not deliver on its promise.
Often, schedules turned out to be unfeasible on the shop floor because APS plans at an
aggregated level using various assumptions regarding data and efficiency factors.
No shop floor connectivity: Although APS is an integrated planning system, it
is located at the ERP layer like MRP and MRP II. Therefore, it has no access
to shop floor data. ERP requires different data than the shop floor, which
forces APS to use simplifications and to plan at an aggregated level (resource
classes instead of single resources). Furthermore, a shop floor planning and
scheduling tool needs to react in real time to disruptive events. This would
require the ERP system to be updated in real time with a huge amount of data

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and constraints. The ERP systems were neither made for such real time
updates nor were they made to handle shop floor specific data.
Rule-based (heuristic) approach: like the MRP approaches, APS uses rulesbased instead of analytical algorithms. This makes the approach fast, but the
results are still inefficient schedules.
APS proved to be a good solution for material flow planning above the factory level,
but was not sufficient for detailed production scheduling on the shop floor.

2.3.4 Detailed Production Scheduling (DPS)

To give planning and scheduling software access to shop floor data, the gap between
ERP and shop floor level needed to be closed. Detailed Production Scheduling (DPS)
is based at the MES level. Executable production schedules for the shop floor can be
derived from ERP production targets originating from the business level. Whereas
APS and MRP schedules tell when a certain quantity of products need to be finished,
MES level scheduling details how to split these into production orders and individual
resource duty rosters. The resulting production plans can be executed on the shop
floor.
Detailed production scheduling makes it possible to model each part of a factory and
the production process instead of planning at an aggregate level. Furthermore, MES
relevant data and constraints ensure that the plans are executable on the shop floor.
For the first time, it became possible to replace manual scheduling by the factory
planners on single resource level.
Even if most of the drawbacks of the ERP planning and scheduling tools were
overcome, DPS kept one major problem of these tools:
Rule-based (heuristic) approach: To deliver fast results, especially when
reacting to real time events, DPS solutions use rules for scheduling
calculations. They work in a limited solution space and act like a manual
planner would do. Even if DPS is fast, it only can explore local optima within
the solution space of its rules, thus ignoring vast areas of the solutions space
not covered by its rules. Furthermore, rules-based approaches are not robust
under changes in factory layout, process changes, or new product variants.
Often DPS systems are limited to a restricted number of constraints in order to
keep complexity low and to increase calculation speed.
While MES-based DPS are capable of some of the necessary planning and
scheduling tasks; it falls short in allowing plants to reach their full
performance potential. What factories now need is a planning and scheduling
solution which enables them to utilize the advantages of the scheduling
optimization levers in order to gain competitive advantages and operational
excellence.

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3. Intelligent Planning and Scheduling System (IPSS)

3.1 IPSS Intelligent Scheduling
Detailed production scheduling closed the gap between ERP and the shop floor, but it
was unable to utilize the scheduling optimization levers. The results were not
sufficient to solve efficiency and speed issues necessary to reach desired plant
performance.
The reason is the rules-based approach of the DPS solutions which is the major
problem of all discussed scheduling approaches. They are not robust under changes,
limited in their optimization capabilities and have problems with variations in the
production process. Factories are under continuous change and rules-based solutions
tend to lag behind. It takes time until sufficient knowledge has been developed and
integrated into the rule set. During that timeframe performance is poor.
The IPSS algorithm will use an analytical solution instead of rules. Each time a new
production schedule is calculated, the whole factory with all its parameters and
constraints is calculated again. Therefore, IPSS calculates a true optimum within the
solution. In addition, IPSS will deals with changes and events in real time without
need for reconfiguration or reprogramming. This is possible due to the highly efficient
calculation scheme of the algorithm, making planning and scheduling no longer
dependent on rules. IPSS does not aggregate or reduce the possible solution space.
IPSS is robust and can operate in rapidly changing environments (which most
factories are) and delivers real-time results. This also is important for quick reaction
to disruptions of the production process, like machine breakdowns or delays in
material delivery.

3.2 Intelligent Scheduling How IPSS Will Works

The following example shows the benefit of IPSS compared to traditional, rulesbased approaches. Rules-based solutions use a set of heuristics which cover the most
common scheduling scenarios for the given production process.
Rules-based approaches perform poorly when changes occur in the production
process. If a machine is changed/added or new product variants are included, rulesbased solutions have two possibilities, 1) Using the old heuristics for the new situation

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which decreases output quality or 2) adapting the rules. The latter option results in a
customization effort for the solution and takes time to develop, meanwhile the
production process may yet change again. Also, the heuristics are developed from the
experiences of factory staff. These experiences also take time to develop and program
into the set of rules.
IPSS on the other hand does not use heuristics. It will creates a mathematical model of
the production process and solves this problem in an analytical fashion. It considers
many possible schedules within this model and chooses the best one based on
optimization criteria. This feature makes IPSS robust under changes in the factory
layout or the production process. These changes result in a slightly different model
which can be calculated in the same way. There is no need to update any rules.
The following scenarios will further explain the scheduling capabilities of IPSS

3.2.1 Scenario description

Scenario 1: Suppose the demand environment for a particular product requires
three red products and three green products to be manufactured during the next
production cycle. The products are produced on the same production line. The
color is applied by a coloring device, which must be cleaned for 30 minutes
before a new color can be applied. It is most optimal to produce all of the
items of one color first (say reds first), do the change-over for the coloring
device, and then produce the products of the second color. This production
sequence has one downtime of 30 minutes to clean the coloring device
Scenario 2: The Scenario 1 situation can be made more complicated. Lets
assume that the products must be transported to a different factory in special
transportation crates, which are limited in supply and depend on the shape of
the product. Further, assume that two products of the red variety and one of
the green variety are of shape A and the remaining products are of shape B.
Further, assume that all of the crates required for shipping shape B products
are currently in use. The previous production schedule for Scenario 1 (first
reds, then greens) is no longer feasible. The third red product cannot be placed
into a transportation crate because no crates for this shape are currently
available. In this situation, production scheduling must take crate availability
(a factory restriction) into account.

3.2.2 Conventional Solutions

The production planning problem is commonly solved by systems that possess
knowledge about factory restrictions in the form of rules. These rules represent knowhow which factory employees have developed over time while performing factory
operations. In Scenario 1, one such rule would state: Produce same colors in
sequence. In Scenario 2, the production rules would state: Produce same colors as

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long as transportation crates are available. The problem with such rule-based
approaches becomes apparent when the factory restrictions change.

3.2.3 Example: Changing Factory Restrictions

In the two Scenarios just considered, the situation may now be changed to upgrade the
coloring equipment of the production line with an additional stand-by coloring
device. This second coloring device can be used while the first device is being
cleaned. More specifically, when a color change occurs, the second device can be
rotated into the production line immediately while the first device moves out of it to
be cleaned. The change-over time for color changes is thus reduced to zero. The
introduction of the second stand-by coloring device totally changes the optimization
problem. Any rules intended to optimize productivity by minimizing color changeover times have become invalid. The entire rule-based optimization scheme must be
redesigned.

3.2.4 IPSS Intelligent Scheduling

As demonstrated in the scenarios above, rules-based systems are fragile under
changes in factory restrictions. Furthermore, rule-based optimization strategies are
only as good as the rules system, i.e., the knowledge of individuals (often times not
experts) who derived the rules.
The IPSS approach to the production planning is not rules-based. It involves a
computer-based system and method that simulates the factory shop floor and creates a
virtual factory. This virtual factory is designed to provide the ability to simulate and
assess any theoretically possible production sequence. By simulating many different
sequences, an optimal sequence can be established based on user defined optimization
criteria. IPSS is robust under changes in the factory restrictions. Each time there are
changes, they are factored into a new virtual factory; and the optimization is
determined to provide solutions for production planning.

3.2.5 Advantages over current approaches

Currently, factory staff solves the production-planning problem either manually or
with the help of rules-based software systems. The manual process involves a
factory employee who considers the current demand, the current state of the factory,
and previous experiences gained during the operation of the factory to guess an
optimal production sequence. The rules-based software system codifies the
experiences of factory staff into rules and uses these rules to plan production.
Therefore, a rules-based system solves the problem in the same way factory staff
would solve the problem manually. Using rules-based systems may speed up the
process. IPSS has a number of advantages over the currently used methods for solving
the production planning problem.

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Attributes of intelligent Scheduling and Planning System that addresses relevant
optimization lever

How these advantages participate in utilizing the efficiency of the scheduling

optimization levers can be seen in the diagram below:
1. Speed: IPSS is very fast especially when compared to the manual process.
The problem is typically solved in a few minutes, while manual solutions may
take hours. The speed advantage depends on the complexity of the particular
production environment.
2. Robustness: The algorithm does not depend on rules derived from a
particular setup of a given factory. As demonstrated by means of example, any
such rules become invalid if the factory setup changes. IPSS does not suffer
from this drawback
3. Unbiased Solution: The number of theoretically possible production
sequences can be extremely large because they depend on the number of
different products which are to be produced during a given production cycle.
Existing solutions do not consider the entire spectrum of possible solutions,
but are biased by experience derived rules. The quality of the output (the
optimal production sequence) depends on the quality of the rules and,
ultimately, on the competence of the factory staff who developed the rules.
IPSS considers the entire spectrum of possible solutions and calculates the
optimal solution analytically unbiased by experience derived rules.
4. Flexible Optimization: The optimization criteria are built into rules-based
systems. Once a rules-based system is defined to optimize according to a
certain criterion for example highest productivity then the optimization
criterion cannot be changed. Within IPSS, the planning and optimization
aspects are decoupled. The optimization criteria are input parameters for the
production planning algorithm and can be easily changed or combined.
5. Analytic Solution: IPSS allows for easy changes to the Virtual Factory.
Factory staff can plan changes in the factory by simulating these changes first
in the Virtual Factory and analyzing the impact of these changes. This helps
factory staff in the decision making process.

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4 Summary
Planning and scheduling enables control of efficiency levers which directly influence
factory and company performance. Reduction of inventories, increased throughput
and reduction of cost help to reach sustainable competitive advantages. Planning and
scheduling is not a local task; but integrated in a company-wide planning process
contributing to the company's overall success.
To utilize these gains, the planning and scheduling solution must do more than just
deliver an executable schedule. It needs to deliver an optimal solution with regard to
the desired goals while considering all types of constraints including dynamic and
event driven bottlenecks. Rules-based systems and approaches to production planning
are out of touch with the every day challenges on the factory floor and simply cannot
deliver optimal results. IPSS is an effective real-time planning tool capable of
controlling all optimization levers and providing savings by unlocking hidden
capacity potentials in the production process providing a quick return on investment.

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